Political foundations of the resource curse. Robinson, J. A.; Torvik, R.; and Verdier, T. Journal of Development Economics, 79(2):447--468, April, 2006.
Political foundations of the resource curse [link]Paper  doi  abstract   bibtex   
In this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse. We show: (1) politicians tend to over-extract natural resources relative to the efficient extraction path because they discount the future too much, and (2) resource booms improve the efficiency of the extraction path. However, (3) resource booms, by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections, increase resource misallocation in the rest of the economy. (4) The overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes. Countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create. Countries without such institutions however may suffer from a resource curse.
@article{robinson_political_2006,
	title = {Political foundations of the resource curse},
	volume = {79},
	issn = {0304-3878},
	url = {http://www.sciencedirect.com/science/article/pii/S0304387806000137},
	doi = {10.1016/j.jdeveco.2006.01.008},
	abstract = {In this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse. We show: (1) politicians tend to over-extract natural resources relative to the efficient extraction path because they discount the future too much, and (2) resource booms improve the efficiency of the extraction path. However, (3) resource booms, by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections, increase resource misallocation in the rest of the economy. (4) The overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes. Countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create. Countries without such institutions however may suffer from a resource curse.},
	number = {2},
	urldate = {2013-10-16},
	journal = {Journal of Development Economics},
	author = {Robinson, James A. and Torvik, Ragnar and Verdier, Thierry},
	month = apr,
	year = {2006},
	keywords = {Clientelism, Natural resources, Political economy},
	pages = {447--468},
	file = {ScienceDirect Full Text PDF:files/47608/Robinson et al. - 2006 - Political foundations of the resource curse.pdf:application/pdf;ScienceDirect Snapshot:files/47609/S0304387806000137.html:text/html}
}
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